|  2012-11-14

The real state of real estate in Romania

There are some good news and some bad news regarding the Real Estate industry in Romania over the last couple of years. The bad news is that the long awaited recovery has not arrived yet, or at least is not visible to most people. The good news is that there are some positive signs that market contraction is reaching the end and opportunities that will lead to recovery under specific conditions are here.

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Where are we standing?

 

Four years after the global credit crisis, the Romanian market in general struggles to stabilize before starting to grow dynamically in all sectors again.

 

While Romania still remains an attractive market in terms of real estate transactions, the severe restrictions put in bank financing, as well as the Euro crisis have raised the investment risk and quelled investment appetite.

 

The continuous crisis in the Eurozone, which accounts for the vast majority of investments in the Romanian economy, is clearly an obstacle in attracting further investments from countries in this region (but not only). FDI is down by 30% in the current year. Unless the environment regarding the survival of the Euro does not become clear, this instability will continue to affect the Romanian economy and consequently the Real Estate market.

 

Banking finance is still deteriorating and the costs and terms imposed are not affordable for many players. Finance is very limited, very expensive and directed to very few heavily scrutinized investors. Furthermore, the political environment in Romania is another factor which could withhold the prospects of the country.

 

Under these circumstances, not surprisingly, funds invested in the European Real Estate are directed to the markets with national economic performance and stability. Around 75% of total transaction volume was completed in prime property in just five countries.

 

Looking two years back

 

Taking for granted the specific global, European and local political and economical environment, 2011 and first half of 2012 overall could not have been great years for the Real Estate market. Yields in Romania are stabilized to 8% for offices, 8.75% for commercial centres and 10.25% for storehouses.

Despite this however, there were a number of facts and transactions indicating that some of the most solid and dynamic players in the market position themselves in Real Estate investments. This suggests they believe that the worse is gone or at least is approaching to its end and now it is the right time to invest.

 

One of the most dynamic investors, AIM and Johannesburg listed property investor New Europe Property Investments (NEPI) concluded in 2011 and 2012 a number of big deals:

In early 2011, they acquired the office project Floreasca Business Park, in a deal of over EUR 100 million (remaining the biggest deal in Romanian Real Estate after crisis).

 

Following this, by December 2011, NEPI completed its capital increase through rights issue of approximately 14.3 million new shares to raise about EUR 40 million in fresh equity. It is said, the issue was oversubscribed by 48%.

 

In January 2012, NEPI acquired the City Business Centre project in Timisoara, from businessman Ovidiu Sandor and partners. Beyond this, in December 2011, NEPI started works on its 50,000 sqm shopping centre in Ploiesti. On another project, NEPI bought and undertook the renovation of a 4,500 sqm historical building at a 12,000 sqm class business centre in the Romanian capital.

 

Another company, Portuguese shopping centre specialist Sonae Sierra, started in July 2011 the construction of its EUR 110 million Adora mall in Craiova. The mall will have 190 shops on a leasable area of 59,000 sq m and has signed contracts for 40% of this surface. Starting work on Adora, confirms Sonae Sierra’s commitment to  Romania, said the local Managing Director, Ingo Nissen. The largest Chinatown complex in South Eastern Europe opened in summer 2011, 16 km from Bucharest, following an investment by 19 Chinese businessmen of around EUR 150 million. The China Town complex covers 40 hectares and hosts 3,275 commercial areas, 1,380 logistic warehouses, cafes, restaurants, casinos, banks and kindergartens.

 

Property investor and developer Iannis Papalekas has completed a couple of remarkable transactions in 2011 and 2012. In November 2011, he got what was characterized by the market “the golden deal” from the most famous bankruptcy of a Romanian mall. Papalekas sold the City Mall for EUR 103 million in 2005 and bought it back in 2011 for just EUR 17 million.

In addition, in 2012, Iannis Papalekas and Dragos Bilteanu acquired Tower Center International – the developer of Victoria Square office tower, in a transaction whose value amounts to approximately EUR 50 million. The company in (one of Bucharest landmark buildings) had failed to rent it because of a litigation process, which is now settled.

 

The housing market in Romania is also seeing important developments. Austria’s listed property group Immofinanz completed at the end of 2011 the acquisition of the additional 69.2% stake in South-Eastern Europe residential developer Adama Holding. It sees Adama as the ideal platform for expansion in the region, especially in Romania. Adama completed 1,500 apartments since its founding in 2005, with 10 projects under way. It has a development portfolio of 1.36 million sqm in 40 further projects. Immofinanz Romanian portfolio includes undeveloped sites in Bucharest And the mid-term objective is to create entire city quarters.

 

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TOP ELECTRONIC EQUIPMENT COMPANIES (2015)
Scoring Methodology by ERNST&YOUNG


 
#
COMPANY NAME
MCR TOTAL SCORING
 
1 STEINEL ELECTRONIC SRL 3,0000
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